Differentiation of family incomes

Introduction

1.1 Sources, functions and structure of income

1.2 Differentiation of incomes

Successful development of socially-oriented market system depends on the level of consistency with the level of economic growth and differentiation of incomes. The present stage of transformation imposes significant restrictions on the use of traditional developed market systems leverage income policy. There is a need to develop science-based comprehensive approach to improving the mechanism of state regulation, aimed not only at income distribution, but also on the scope of their formation, which would ensure through effective implementation of human potential social reorientation of the economy. Priority for the importance of Economy of Ukraine is taking steps to stimulate the state accelerated the growth of primary income, which directly depend on the efficiency of public employment, compared with secondary, which are only means of support capabilities meet the minimum needs of the consumer population.

Sources, functions and structure of income Household income as a politico-economic category represent a certain amount of money and material goods and services received in the course of economic functions and households, primarily families, with about a relationship where there are private property rights in all spheres of social reproduction.

Personal income distribution — the distribution of income between different individuals, families or households. Analysis of personal income distribution makes it possible to identify the factors that determine the level and structure of individual income families.

Family income — the amount of income deliberately organized on the basis of family ties and community life of a small group of people whose livelihoods aimed at the realization of social, economic and spiritual needs of individuals, families and society as a whole.

Family income — the economic basis of family reproduction.

There are various sources of family income:

— Wages;

— Income from property;

— Income from personal subsidiary economy;

— Income from cooperative activities;

— Income from self-employment;

— Government transfer payments (pensions, unemployment benefits, scholarships, free services of health, education, etc.) — Income from other sources (inheritance, etc.). [11, p. 190] Formation of incomes can be expressed by the following formulas:

Dt + DP + Dm = DB (1.1) DB + T = Dv (1.2) Dv — У (P + Op) = MS (1.3)

where DB — income, Dt — income from employment; DP — Income from business activities; Dm — income from property (rent, dividends, interest), T — Transfer payments from the public sector (state) Dv — gross income; MS — net income, P — taxes Op — other mandatory payments. [10, c.175]

Household income in a market economy perform the following functions:

1) prosperity — providing a standard of living;

2) motivation — contribute to the effective scope of the production process by creating a new system of incentives;

3) Social — form the corresponding quality of life, covering working conditions, living and recreation, social guarantees and security, law enforcement and human rights, natural and climatic conditions and environmental conditions, availability of free time and opportunities for its effective use and subjective sense of calm, comfort and stability.

Depending on the form of a distinction is made between cash and income in kind. Formation of incomes at the expense of labor remuneration, payment of social insurance, business income, income from property, income from personal subsidiary plot and self-employment, other income (child support, fees, charitable aid, etc.). Incomes are divided into general and clean.

General revenues include all revenues are calculated before taxes and obligatory payments.

family income ukraine economy

Net income — the result of redistributive processes. These are the income remaining after these payments.net income adjusted taking into account the natural and social transfers.

Natural products include personal income part-time farm, used for personal consumption, transfers in kind, as well as wages in kind. [3, p.98] There are nominal and real incomes. Nominal income — is the value of accrued benefits and natural issue. Real income — is nominal income, adjusted for changes in commodity prices and tariffs. Their value depends on the value of nominal income and wages. Consumer price index affects the purchasing power of nominal income as follows:

Dr = Days / IC (1.4) where Dr. — real incomes; Days — nominal income; IC — Consumer Price Index.

Nominal and real income and the size and dynamics of the main income of certain groups, such as wages, pension or scholarship, provide an overview of the standard of living. Depending on the sources of revenue can be labor, netrudovi hidden.

The concept of level and quality of life are closely related and determine the state of economic and social development. The level of family income should not be below the subsistence level, ie the value that in value terms reflects the legislatively defined level of consumption of goods and services necessary for human life and preserve her health.

Under the Law of Ukraine «On Living Wage» standard cost of living forms per month per person, and also for those who belong to the main social and demographic groups. The subsistence level is an indicator defining poverty in society and reflects the quality of consumption in the population.

Living wage — a minimum number of vital resources needed to support employee life and renewal of its workforce. It defines the lower limit of the required level of social life in certain socio-economic conditions of society. [14, p. 203] In analyzing the cost of living distinguish physiological minimum — cost of goods and services necessary to meet basic physiological needs, and social minimum (minimum budget of plenty) — Minimum Standards meet the physiological, social and spiritual needs, ie the cost of goods and services that society considers necessary for preservation of an acceptable standard of living.

Levels of income of the population can be represented schematically (Figure 1.1):

magnitude of income, which reflects the upper limit of poverty. This income level at which its recipients can not be considered serednozabezpechenymy is the minimum consumer budget, poverty, poverty threshold, and so on.

magnitude of income, reflecting the lower limit of poverty. This minimum level of income that enables its recipient to satisfy the minimum level of basic needs. This is income that modern civilized state should provide each member of society. Lower limit of low income represents about 40% of median income in the state;

magnitude of income that reflects the guaranteed level of security. Such income usually does not exceed the upper limit of low income and no less than its lower limit, ie the physiological minimum, this level is a social minimum. Specific forms of guarantees can be formally defined pensions, wages, use of various cash payments and other means of assistance. At the location of the state-guaranteed minimum between the upper and lower bound poverty affects a number of factors: state of the economy, especially social policy.

In a modern market economy income individuals, families (households) differ not only in terms, but also in structure.

The structure of family income on their areas of use:

— Food;

— Purchase of clothing and footwear;

— Purchase of durable goods;

— Socio-cultural and personal services;

— Utilities;

— Transport;

— Savings;

— Other expenses.

Cost Structure of the family is an important indicator of economic development.

By law, Engel (German statistics, which in the XIX century. Made an analysis of consumption of families (individuals) with different income levels), with increasing family income increases overall consumption goods, but in different proportions and structural relations. With the growth in family income reduces the share of the cost of food, the share of expenditure on clothing, undergo minor changes in housing costs and utilities, but the share of the costs to meet the cultural and other non-material needs significantly increases. Total return is the main indicator of material welfare of the population and includes all types of income and cost of natural revenue derived from personal subsidiary plot and used for personal (household) consumption. In addition, the total income includes the cost of free services received by the state and local budgets and fund companies — healthcare services, education, subsidized housing, transportation, meals and more. [15, p.152] In conditions of market environment in the economy of Ukraine due vzayemozumovlenoyi of objective and subjective factors forming the population characterized by the following trends:

— Expansion of the structural components of family income;

— Significantly reduced the overall level of real income;

— Deepening the gap between nominal income and revenues that are available;

— A weak and unstable growth factor income;

— Dominance pererozpodilchyh processes in the creation of income;

— Increasing the share of proceeds from sales of personal subsidiary plot;

— Naturalization share of income received;

— Shadow of income for tax evasion.

Achieving optimal structure and level of total family income is one of the most pressing problems of modern politics. [7, p.78]

Differentiation of incomes Some income is gradually transformed into consumer goods and various services. It is at the stage of consumption is income differentiation. People for various reasons may not receive exactly the same income. However, according to economic theory, not be allowed nekontrolovanosti income differentiation, as this may cause a significant undue polarization of society that may have political, social and political fallout. From an economic point of view, society has no opportunity to replenish the country’s economy needs a sufficient number of qualified professionals with social — zahostryatsya social contradictions, the political — you can not achieve political stability in society.

Differentiation of incomes — an important element of internal policy, and therefore it should monitor the process to ensure a safe social level in society. Differentiation of income determined by the development of productive forces and production relations and depends on economic, demographic and social factors. Income differentiation can demonstrate through material sufficiency ratio of richest 10% and 10% of groups (a sensible ratio). In Ukraine, this ratio is significantly increased. Thus, in 1992, but PA was 1: (7.5−8.0), and already in 1998 — 1: 13.5.

Differentiation of income is influenced by various factors related to personal achievement or independent of them, with economic, demographic, sotsiobiolohichnu or political nature. Among the causes of inequality of income distribution are defined: the difference in capabilities (physical and intellectual), differences in education and training, hard work and motivation, initiative and professional appetite for risk, origin, size and composition of family, property ownership and market position, good luck, luck and discrimination. [12, p.299] All variety of factors that influence the differentiation of the proceeds can be divided into those that depend on dohodootrymuvachiv and those that do not depend on personal effort. The boundary between these groups of factors may be more or less floating: innate ability and talent may not lead to growth of income and not be used, while modest abilities may develop as a result of education and strong work motivation, ownership of property by inheritance can lead as to its increase, and the loss of properties and income from it. Factors of differentiation have different effects on the degree of unevenness of income distribution. Overall revenues are distributed more evenly by factors of property, the workforce, but the relation between these different factors in different countries and at different times. The main purpose of public distribution and redistribution of market income is to reduce the sharp differentiation of incomes by income and capital. Changes in income in a transitional economy caused a sharp fall in real incomes, changes in their structure, growth differentiation incomes.

All income differentiation factors that are independent of personal effort, act as a sort of barriers to improving the income status. State income redistribution and social policy as a whole is intended to eliminate some barriers and consequently neutralize or weaken the action of others. Developing a system of public education and health services, laws that protect human rights, restrict discrimination by sex, age or ethnic grounds, the state contributes to the formation of income as a process that develops objectively.

Differentiation of incomes due to various reasons: different intellectual, physical abilities of people, different levels of education and training, different tastes and professional ability to take risks, if inequality of property; different temper, bonds, misery, discrimination and others. To reduce income differentiation, the following priority areas [4, s.215] - consistent increase in the minimum wage and a phased approach to the subsistence level — improving the system of remuneration of employees of social sectors — health, education, culture and services — the development of regulation of wages by collective agreements and tariff agreements in the system of social partnership and removal on this basis unduly high differentiation in remuneration of employees, branches and territories — to promote effective employment, preventing unemployment, the creation new jobs and provides conditions for small and medium businesses — compulsory insurance of persons working under employment contract to prevent the loss of income due to unemployment, illness or old age — improving the effectiveness of social support the most vulnerable and disadvantaged groups and providing State social benefits, which include housing benefits, family benefits and assistance to needy families. Improving quality of life and solvency of the population, along with addressing the problems of personal incomes, equitable redistribution of national product creates a solid base of domestic investment for the domestic economy and ensure its dynamic development and a real prerequisite for accelerating the solution of social problems.

In Ukraine, poverty often come upon people not just enough educated and skilled workers but, moreover, still in full employment, that is all nonsense. Yes, about 65% of poor families — those of them, in which at least one person is working. This situation reflects typical to poor public low cost labor. Poverty on self-esteem tend to significantly exceed the scale of objective poverty.

According to the 44 surveys conducted during the 1998;2008 Ukrainian Institute for Social Research and the center of «Social Monitoring», lower than the average Ukrainian family consider 60% of the population of Ukraine. [7, sec.134] For poverty characteristic factor is lack of money, when received minimal cash income is below subsistence level. For middle-class characteristic feature is the excess earned income above the minimum cash value of the subsistence minimum, which allows to accumulate money.

In contemporary Ukraine is still early to talk about forming a segment of the population as middle class in the civilized sense of the concept. [1, 270] In Ukraine, there is another urgent problem — the huge discrepancy between incomes of rural and urban population. Thus, in the first group of the population are significantly lower than the income of urban residents. This is explained by the difference in pay of rural and urban populations, where the pay gap at the sectoral level is 1.5 times or more. That is imbalance of income and expenditure for the territorial and sectoral characteristics.

The standard of living of the rural population is almost close to the needy. Farmers spend less their wages on food, but the diversity of their food with low nutritional and unbalanced. In parallel, the peasants increased other costs that are almost absent in the urban population: the construction of housing and maintenance of individual economy, without which life under these conditions would be simply impossible.